§ Statement of Purpose

The View from 1776 presents a framework to understand present-day issues from the viewpoint of the colonists who fought for American independence in 1776 and wrote the Constitution in 1787. Knowing and preserving those understandings, what might be called the unwritten constitution of our nation, is vital to preserving constitutional government. Without them, the bare words of the Constitution are just a Rorschach ink-blot that politicians, educators, and judges can interpret to mean anything they wish.

"We have no government armed with the power capable of contending with human passions, unbridled by morality and true religion. Our constitution is made only for a moral and religious people. It is wholly inadequate to the government of any other." John Adams, to the Officers of the First Brigade, Third Division, Massachusetts Militia, October 11, 1798.

“The risk of a disorderly decline in the U.S. dollar could increase unless policies are put in place to address global savings-and-investment imbalances, the International Monetary Fund said.”

Let’s first define “disorderly decline in the U.S. dollar.” That means simply that the United States money supply, basically the volume of currency in circulation and bank deposit balances, is continually expanding faster than the real output of goods and services in the United States. The results are rising domestic prices and rapid expansion of imports of goods and services from other countries.

In effect, we are temporarily exporting some of our dollar inflation by getting foreigners to hold ever-growing amounts of U. S. dollars. Because we in the United States are not producing goods and services in amounts large enough to absorb the accumulating dollar balances held by foreigners at prices competitive on world markets, they will eventually dump their dollar holdings and exchange them for other, sounder currencies.

At some point in the future, the prices of imported goods will have to rise in order to compensate foreign shippers for the increasing risk of dollar devaluation. When that begins to happen, the only real check on domestic inflation (low-priced imports) will be removed, and large-scale inflation will commence in the United States.

If our inflation should come even close to what happened in the 1960s and 1970s under Presidents Johnson, Nixon, and Carter, a huge part of the purchasing power of your personal savings will evaporate. When that occurred in the the earlier period, more than half the value of people’s lifetime savings for children’s education and retirement was washed away in the inflationary deluge.

Before 1933, people saved enough money to buy what they needed, or borrowed only when they had enough income for rapid repayment of debt. Since 1933, generations of people have been schooled to the view that they are entitled to buy NOW whatever they desire, on credit. Maxing-out credit cards is the American way of life. The moral dictates of thriftiness and saving have been thrust aside as old-fashioned ignorance standing in the way of hedonistic sensual gratification.

How did we get into this pickle?

The answer is that the socialist policies of President Franklin Roosevelt’s New Deal pushed us off the cliff, and we have never been able to climb back to level ground.

Almost immediately after taking office in 1933, FDR made private ownership of gold illegal and prohibited the enforcement of contracts that gave suppliers and holders of dollars the option to demand payment in gold if the dollar began to depreciate.

Those gold clauses and basing the dollar on a specific amount of gold made long term inflation almost impossible. Of particular importance, it placed a limit upon reckless Congressional spending, because the Federal Reserve couldn’t simply create an unlimited amount of money out of thin air to purchase the Government bonds necessary, as in today’s case, to fund deficit spending.

President Roosevelt consciously and deliberately set out to create inflation, believing that doing so would end the Depression. The President’s staff members met almost daily to manipulate the gold market so that the nominal dollar price of gold would increase steadily (i.e., the dollar would be steadily inflated and its purchasing power reduced).

The thinking, based on politics and very poor understanding of economics, was that the Democratic Party could thereby become the permanent majority party by purchasing the votes of farmers and labor union members. In the 1930s, socialist industrial unions were the coming force in the labor market, and farmers still accounted for a bit more than half of all employment.

Inflation would translate into higher wages for industrial union workers, who would be able to remain ahead of the inflation curve by extorting wage increases that the rest of the nation’s workers would not receive. Effectively, the unions were profiting at the expense of the majority of the nation’s workers, who were in smaller, non-industrial-union businesses.

Only the bankers and industrialists, whom FDR called economic royalists, would be hurt. Manufacturers’ costs were forced up at a time when it was impossible to institute offsetting price increases. With sharply reduced profits, and faced with an aggressively hostile Roosevelt administration, private industry was fearful to expand production or to hire new workers.

Because of inflation, bankers would get repayment of loans in dollars worth less than the dollars that were lent. Small wonder that banks began refusing to make new loans or to renew outstanding loans.

Thus, what started as a normal business cycle was turned by the Roosevelt administration into the Great Depression that crushed citizens for nine more dreary years until Japan attacked Pearl Harbor and we geared up for total war mobilization.

Part two of the plan was Federal supervision of industry via the National Recovery Administration (NRA). The NRA established government councils to mandate sale prices, production quotas, and wages, following almost exactly the pattern established during the preceding decade by Mussolini’s Fascist State Corporatism.

Part three was changing the management of the Federal Reserve and re-writing the banking law to remove gold as the primary reserve supporting the dollar’s value and substituting government securities in its stead. Needless to say, there has been no check since then on rapidly expanding Federal deficit spending. Since 1933, inflation has always been with us; consumer prices have risen more than 550%, after stability (except during war times) from 1780 until 1933. What cost $1.00 in 1932 today costs $6.50.

At the root of the New Deal’s liberal-socialism was the Keynesian theory that the Depression was caused by people’s thriftiness and saving for their families’ future. People had to spend more, and, if they didn’t, the Federal government had to step into the breach and spend enough to employ everybody.

The result was the welfare state and an ever-burgeoning Federal bureaucracy. Decades of inflation have made it impossible for us today to produce enough competitively-priced goods to offset our imports. But we are among the world’s leaders in bureaucratic waste and pork-barrel spending.